The International Court of Arbitration of the International Chamber of Commerce (“ICC”) is arguably the world’s leading institution for international commercial arbitration. A common complaint regarding ICC arbitration, however, revolves around the often excessive amounts of time and money incurred in completing ICC arbitration from start to finish. Such costs have had the effect of discouraging some parties from utilizing ICC arbitration (or even contractually providing for ICC arbitration during the front end stage of a project), particularly for smaller-scale projects and/or claims involving relatively low amounts in dispute. Although other arbitral institutions, such as the Singapore International Arbitration Centre, the Stockholm Chamber of Commerce, Swiss Chambers Arbitration Institution, and the International Centre for Dispute Resolution, have implemented expedited arbitration options, the ICC has lagged behind despite the fact that there has been a noticeable decline in ICC arbitration for smaller matters during the past decade.
In response to the need for speedy and cost-effective arbitration, the ICC amended its Rules of Arbitration in December 2016 to add provisions for an expedited procedure (“Expedited Procedure Provisions” or the “Provisions”) that would, among other things, shorten the time required for arbitration of claims equal to or less than USD $2 million (or a higher amount, if the parties mutually agree) to approximately six months and decrease administrative and arbitrator fees. The Expedited Procedure Rules took effect on March 1, 2017.
Overview Of The ICC’s Expedited Procedure Provisions
The Expedited Procedure Provisions are contained in Article 30 of the ICC Rules and Appendix VI. The Provisions mandate that parties, by agreeing to arbitration under the ICC Rules, agree that the Provisions shall take precedence over any contrary terms in an arbitration agreement or arbitration clauses.
The Expedited Procedure Provisions apply in the following circumstances:
- The arbitration agreement was executed after March 1, 2017;
- The amount in dispute is equal to or less than USD $2,000,000;
- The parties have not agreed to opt out of the Expedited Procedure Provisions; and
- The arbitral tribunal has not ruled, upon request or motion by a party, that it is inappropriate to apply the Provisions to a particular dispute.
The Expedited Procedure Provisions also provide that:
- The arbitral tribunal may appoint a sole arbitrator within a time limit set by the ICC Secretariat notwithstanding any contrary provision of the arbitration agreement. The arbitral tribunal may, however, also appoint three arbitrators if appropriate in the circumstances;
- The parties may not bring new claims once the sole arbitrator has been appointed (unless expressly authorized to do so);
- The Case Management Conference must take place no later than 15 days after the arbitrator has received the arbitration file from the ICC;
- Terms of Reference are not required;
- Written submissions by the parties are limited unless otherwise authorized by the arbitrator upon consultation with the parties;
- Requests for document production are not permitted unless otherwise determined by the arbitrator upon consultation with the parties;
- The arbitration may be heard on documents only (no hearing and no witness testimony) unless otherwise determined by the arbitrator upon consultation with the parties;
- The deadline for final award is six months from the date of the Case Management Conference unless the arbitral tribunal decides to extend the deadline; and
- Fees of the sole arbitrator are based on a reduced fixed fee scale (contained in Appendix III of the ICC Rules). Expedited Procedure arbitrator fees are twenty percent less than the arbitrator fees required in traditional ICC arbitration.
In a nutshell, the Expedited Procedure Provisions may not be suitable for all disputes, but they should be seriously considered by parties in situations where: (a) the amount in dispute is relatively low and/or has minimal impact on the parties’ respective businesses; (b) the dispute is straightforward, not complex, and can be sufficiently heard on the basis of documents only; (c) both parties agree to utilizing the expedited procedure; and (d) the amount of time and money invested in the arbitration is of significant concern.
Takeaways And Considerations
The ICC’s Expedited Procedure Provisions have major ramifications for parties not only during the back-end dispute resolution stage of a project but also during the initial contracting stage. Because the Provisions apply automatically to all disputes not exceeding USD $2 million on projects with ICC arbitration dispute resolution clauses, parties will need to decide at the contract stage whether to expressly exclude application of the Provisions. Parties may also specifically draft contract language agreeing to apply the Provisions to disputes exceeding USD $2 million and/or set a different amount in dispute triggering application of the Provisions.
Additionally, it will be interesting to see how the ICC will enforce the Provisions in practice. The timeline of six months from the date of the Case Management Conference to final award is extremely tight by traditional ICC arbitration standards, with little room for deviation or error. Thus, consequences of such a timeline will include, among other things, limited submissions from the parties, limited (if any) requests for document production, completion of document production in a significantly shorter time period, no bifurcation of proceedings, and the parties’ inability to nominate their own arbitrator(s). If there is any hope for a truly effective expedited arbitration, the ICC will need to firmly enforce the Provisions by implementing strong procedural measures. For example, the ICC must come up with effective responses to obstinate parties that fail to adhere to the Provisions’ requirements. Choice of arbitrators will also likely prove crucial to the overall success of the Provisions.
The Expedited Procedure Provisions viewed through a big picture lens, however, reflect immense potential to significantly enhance the speed and cost-effectiveness of ICC arbitration for smaller disputes and serve as an effective response to the concerns of the international business community regarding the time and costs of utilizing one of the world’ preeminent arbitral institutions. Only time will tell whether the Expedited Procedure Provisions will provide parties a truly effective “fast track” alternative to traditional ICC arbitration.